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When a corporation ceases its business operations, all assets owned by the company must be distributed.This process is known as liquidation and is necessary, even in cases when the corporation is being sold or converted into a different business structure.Gain is calculated by subtracting the value of the property transferred from its worth at the time it was acquired.The shareholders are also taxed on the transfer, provided the assets exceed the value of the stocks traded.At one time, there were only three options for company organizers choosing a form of business organization: the sole proprietorship, the partnership and the corporation.Then in the 1970s, the limited liability company (LLC) was introduced in some states.
C corporations are also subject to what is known as "double taxation." This type of tax treatment means that income and gains on property are taxed first at the corporate level and then again at the individual shareholder level for any dividends received.I find it it easier to run these distributions over to Sch D (8949), but I would always make certain that they appear on the Sch D to match whatever has been reported to the IRS. People come to Accountants Community for help and answers—we want to let them know that we're here to listen and share our knowledge.We do that with the style and format of our responses.All distributions paid by KBS REIT in 2017 will generally be characterized as a return of capital in each stockholder’s Form 1099. If the cash distribution is on a stock for which you have a basis, you do not have a taxable event until the distributions exceed the basis. If you have no basis, then you have either a long term or a short term gain.